Argentina renegotiates debt ahead of legislative elections – 07/10/2021 – Latinoamérica21

It’s a difficult year for Argentina.

The vast majority of the population lives in anguish due to dire economic conditions and the protracted vaccination campaign.

Meanwhile, the government has managed to prolong the debt payment and its consequences, and the parties are gearing up for the upcoming legislative elections in November, which could reshape Argentina’s political map.

At the end of 2019, Mauricio Macri lost the elections after the fall of his government due to the collapse of the peso, inflation and the disaster of the national accounts.

The solution to the disaster at the time was a gigantic loan from the IMF (International Monetary Fund), which citizens rejected in the following elections, when they handed over the presidency and vice-presidency to Alberto Fernández and Cristina Fernández de Kirchner.

Fernández came to power with reunified Peronism, corroborating the maxim that “united Peronism will never be defeated”.

Most of the different sectors of Peronism (something only Argentines can understand) supported the alliance represented by Fernández and Kirchner. “With Cristina it is not enough, without Cristina it is not possible” was the realistic conclusion drawn by the Peronists of Jujuy in Patagonia.

And then came the virus

Initially, the government is not doing badly in terms of health and even the authorities “sing” about their neighbors.

But soon the coronavirus spread and society, accustomed to socialization and intense city life, fell under the rigors of quarantine. Tourism – a good source of foreign exchange – collapses, stadiums, cinemas and theaters are closed, and the recovering economy takes a hit.

In 2019, the dollar was worth around 50 Argentine pesos, while today the official exchange rate is above 100 pesos and the so-called “blue” dollar exceeds 170.

Inflation is increasing month by month and poverty affects more than 40% of the population.

In this context, at the end of the year, the first deadlines were reached to start repaying the more than 45 billion US dollars of the IMF loan.

Faced with such a challenge, the government represented by the Minister of Economy Martín Guzmán launched an offensive against its main creditors represented by the IMF and the so-called Paris Club, and in both cases, succeeded in postponing the payments until March 2022.

Avoiding default is vital for everyone, and that’s where politics comes in.

While waiting for the elections

Despite the positive point, everything indicates that the ruling party has suffered attrition.

How much more affects the president than kirchnerism? Will Peronism continue to be united? Several episodes show the differences within the ruling party.

Cristina Fernández advances the bishops and positions Axel Kiciloff, now governor of the province of Buenos Aires, as presidential candidate.

In opposition, the governor of the capital, Rodríguez Larreta, contests the PRO candidacy for Macri and moves peons to the province of Buenos Aires (Argentina’s main electoral district). Radicals are also encouraged, and “by the rules” the Argentine socialists are divided.

Faced with a polarized scenario between Larreta-Macri on the right and Kirchnerism on the other side, many wonder if a middle Korea between North Korea and South Korea would not be desirable.

Especially in view of the partial legislative elections of November 14, during which 127 of the 257 deputies and 24 of the 72 senators will be elected (the primaries will take place on September 12).

In such a scenario, it is likely that the creditors would agree to extend the renegotiation of the debt while awaiting the election results, which would be an indicator of the power of the government and an announcement of what could happen in the presidential elections.

the usual uncertainties

It is not all gloomy.

As the Pope is Argentinian and certainly has an influence at the top, the prices of soybeans and other grains have skyrocketed in recent months, and these days soybeans generate more income than meat.

The Chinese are asking for Chinese volumes, and Argentina is one of their main suppliers, so foreign currency is coming in and the Central Bank doesn’t suffer as much.

In this context, and in order to curb the rise in the price of meat, the government has decreed a ban on its export.

Will it work?

Government controls are not appreciated by risk rating agencies, and Argentina has just lost its status as an “emerging” country, which will affect its access to credit.

For now, shares of Argentine companies are down, notably YPF.

For a change, there are a lot of questions. Will other vaccines arrive? Will they be effective against the delta variant? Will inflation be reduced? Will the dollar stabilize?

The anguish of Argentines is understandable.

In the midst of this depressing panorama, there is one aspect to highlight. Unlike most Latin American countries, where citizens no longer trust political parties, in Argentina it seems the same is not happening.

The political debate continues to take place between the parties and with mechanisms to resolve their differences. At the present time, Argentines at least preserve their party system.

Translation by Damaris Burity

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